MIDAS SHARE TIPS: Concurrent Technologies firing on all cylinders

America is nervous. Top officers describe situations within the Middle East as essentially the most harmful they’ve seen in at the least 50 years, with troops underneath assault throughout the area, worldwide vessels struggling repeated strikes within the Red Sea, and – final week – the loss of life of three US service personnel in Jordan.

The White House will not be alone in its considerations. War in Ukraine, hostilities in Gaza, elevated aggression from China – all of them level to a world that appears extra febrile than it has been in a long time.

And that places politicians underneath stress to answer laborious questions from the general public. Do the armed forces have adequate manpower? Are they supported by the most recent gear? Can they defend our nation and our values?

Increasing numbers of individuals really feel that this isn’t an surroundings to scrimp and save on defence. And, whereas debates persist right here and abroad, the temper amongst governments is evident – the most recent expertise is crucial to guard army personnel and others from hostile aggressors.

Colchester-based Concurrent Technologies is neatly positioned to help these efforts. Founded in 1985, the corporate specialises in pc merchandise for harsh and rugged environments, the place resilience and high quality are crucial.

Strategy: Concurrent Technologies has shifted its focus in direction of defence

For a few years, Concurrent labored primarily with telecoms companies. Lately, nevertheless, the agency has shifted its focus in direction of defence, which now accounts for round 70 per cent of revenues.

Concurrent shares are 86p and may transfer significantly greater over the subsequent few years, as chief government Miles Adcock has bold plans for progress and a eager sense of ship them. When Adcock arrived in 2021, Concurrent was in a little bit of a state. Managers had been in place for many years, product improvement was gradual and gross sales efforts had been lacklustre. Adcock took the bull by the horns and set to work. 

With a long time of expertise at defence corporations together with BAE Systems and QinetiQ, he recognised that the core enterprise had loads of potential nevertheless it wanted extra power, extra focus and extra spirit.

Dozens of old-timers left however new recruits had been introduced in, a lot of them engineers and different specialists who had labored with Adcock prior to now. A shift within the tradition took root inside months and right this moment the corporate is firing on all cylinders. 

Last month, Adcock revealed that gross sales and earnings for 2023 could be forward of forecasts, with revenues on observe to climb greater than 60 per cent to £31 million. Earnings had been hit in 2022 by a persistent scarcity of essential provides however they rebounded final 12 months and brokers now count on earnings to soar from £400,000 to £3.6 million.

The order pipeline is wholesome, too. Concurrent provides the Ministry of Defence, the US Department of Defense and armed forces in international locations corresponding to India, Malaysia and South Korea.

Bidding for brand new contracts is extremely aggressive, with a number of corporations requested to submit concepts at any time when a brand new piece of package is required. Military departments will not be simply in search of high-quality, cutting-edge concepts, additionally they have to know that profitable bidders can ship the products on time and repair them if something goes amiss.

Rival contractors are sometimes significantly bigger than Concurrent and the agency would usually win one or two bids a 12 months. Last 12 months, Adcock and his staff gained eight and so they hope to do even higher in 2024. Deals usually ship a small preliminary enhance in gross sales however momentum builds up over time and every contract can final a decade or longer.

War zone: The agency’s package helps troopers talk

That offers Adcock grounds for optimism. He hopes to greater than triple turnover to £100 million within the subsequent few years, with earnings rising in sync. Highly expert engineers have been recruited, gross sales employees are raring to go and the order guide is prime drawer.

Concurrent is benefiting too from modifications to US Department of Defense procurement insurance policies, which encourage competitors from smaller gamers. Sales within the UK are on a roll, hovering five-fold to round £5 million final 12 months, with extra progress anticipated.

Adcock can also be eager so as to add extra merchandise to Concurrent’s armoury, having acquired a US agency late final 12 months that specialises in aerospace methods for army and business purposes.

Midas verdict: Concurrent computer systems are in a special league from shopper electronics. Used in conflict zones and areas of utmost rigidity, they assist troopers, sailors and pilots to detect hazard, shield themselves and relay important messages. While present financial situations don’t robotically result in elevated spending on defence, they definitely focus authorities minds – and that’s more likely to profit Concurrent. At 86p, the shares are a long-term purchase.

Traded on: AIM Ticker: CNC Contact: gocct.com or 01206 752626